While we used to think of buying a home as part of the American Dream, more and more millennials are turning rental units into their long-term homes.
And because of this, renter’s insurance is becoming an integral part of insuring everyone's livelihoods and, ultimately, their well-being.
In this article today I will dissect the cost of renters insurance policies across the U.S, as well as factors to keep in mind as you consider a renters insurance policy.
What Determines the Cost of Renters Insurance?
The state that you live in will strongly determine the cost of renters insurance.
But there are other factors like your neighborhood and your dwelling that may also influence the price of renters insurance premiums.
Certain factors can cause your premium to increase:
Overall it’s better to live in a denser apartment building with more units to receive lower coverage.
But you can also take steps to lower the cost of your premium. These steps include:
In addition to the premium, you also should keep in mind the cost of the deductible. Some renters insurance plans allow you to pay a lower premium to maintain your insurance.
In return, you’ll have to pay a higher deductible, which is the out-of-pocket cost amount that you owe before your insurance policy pays for a claim.
You’ll have to weigh the risk in the tradeoff between lowering your premiums and paying a higher deductible if you suffer from property damage or personal liability.
According to State Farm, if a fire causes $1500 worth of damage and your deductible is $500, your insurance company will pay the difference: $1000.
THE SIMPLY INSURANCE WAY
Renters Insurance made easy.
Agents not required.
Get quotes and sign up online without talking to an agent. But, we are here if you need us.
Unbiased, expert advice.
Get unbiased insurance education from licensed experts and also avoid dodgy sales calls.
Coverage in minutes.
You can get renters insurance coverage within minutes of getting your quotes and applying.
How Much Does Renters Insurance Cost ?
The cost associated with renters insurance is going to vary by the state that you live in.
Because of this, I decided to break down the average costs of home insurance.
I will also explore which states are the most expensive and which are the most affordable for renters insurance.
The Average Renters Insurance Cost
The National Association of Insurance Commissioners (NAIC) conducted a study based on data from 2017—the latest data available on average costs of renters insurance.
The NAIC study found that the average cost of renters insurance in 2017 was $180 per year or $15 per month.
However, the answer is a little more complicated than you might expect. As with most insurance policies in the U.S., the cost of renters insurance varies heavily based on your state of residence.
Top 5 Most Expensive States for Renters Insurance
Although renters insurance rates remain reasonable in most parts of the country, there are some glaring exceptions.
Here are the top five most expensive states for renters insurance, along with their average annual premiums from 2017:
- 1Mississippi - $258
- 2Oklahoma - $236
- 3Alabama - $235
- 4Louisiana - $235
- 5Texas - $232
Top 5 Most Affordable States for Renters Insurance
Renting brings its own set of challenges, but cheap renters insurance in some states almost makes up for the hardships.
Here are the top five most affordable states for renters insurance, along with their average annual premiums from 2017:
- 1South Dakota - $123
- 2Wisconsin - $134
- 3Minnesota - $140
- 4Nebraska - $143
- 5Iowa - $144
Montana and Wyoming trail right behind at $146 and $147, respectively.
INSURANCE WHERE YOU LIVE
Renters insurance by state.
What Affects the Price of Renters Insurance?
More so than anything else, the coverage determines the cost. Therefore, you’d are probably wondering:
“What does renters insurance cover?”
Type of Coverage
Renters insurance includes two different types of coverage, property coverage and liability coverage.
Most renters insurance policies also include loss of use provisions.
These provisions pay for your hotel and meal expenses if you are temporarily unable to live in your apartment due to an insured loss, such as a fire.
Loss of use is also commonly known as Additional Living Expenses (ALE).
These are the standard provisions that most insurers will include in their coverage. But what else can affect the price of renters insurance?
Coverage Limits
As with any other insurance policy, renters insurance limits how much the company will cover for a claim. This limit depends on the type of plan that you choose.
The higher the limit, the more that will be covered—and the less that you’ll have to pay.
State Farm reports that the average policy covers up to $100,000 in damages.
Therefore, a policy with a liability limit of $100,000 would probably be a good starting place. So, you may be asking, “How much is renters insurance for $100,000?”
As we’ve discussed, the premium can vary widely depending on the value of your possessions, your neighborhood, and other factors about your background.
Policy Deductible
According to Liberty Mutual’s coverage calculator, the deductible — the amount you owe before the insurance company pays for damages—for a $100,000 plan is relatively easy to calculate.
The deductible for a person between the ages of 23 and 30 living in a low-risk area with an income under $100,000 is $500.
Sometimes, adjusting to a higher deductible can save money on your renters insurance premium.
A higher deductible may be worth it if you have expensive electronic equipment or jewelry that would make such a claim worthwhile, despite the high deductible.
Extra Coverage
Finally, you may opt to purchase extra coverage—also known as a rider—for high-end personal items, like jewelry.
Riders will certainly increase the price of your renter’s insurance.
How to Buy Renters Insurance Online
Figure Out How Much You Need
The first thing you need to do is figure out how much coverage you need. This should be fairly simple for you to do since you have read this article.
Essentially, figure out what you need to protect and get enough coverage to protect it.
Get Quotes
Once you know how much coverage you need it's time to do some comparison shopping and to get some quotes.
Your goal is to get instant quotes that don't require personal information. Once you have a few quotes it's time to read some reviews.
Read Online Reviews
At this point you should have one or two insurance companies that you want to go with for coverage.
Your next goal will be to find a few online reviews about each company to learn more about them and how their product works.
You should do this step 100% of the time because some products have added bonuses that you might not be aware of.
Apply Online
Once you find the price you like and the company you want to do business with, it's time to apply online.
This process is usually super simple and you can have your coverage start immediately.
THE SIMPLY INSURANCE WAY
Renters Insurance made easy.
Agents not required.
Get quotes and sign up online without talking to an agent. But, we are here if you need us.
Unbiased, expert advice.
Get unbiased insurance education from licensed experts and also avoid dodgy sales calls.
Coverage in minutes.
You can get renters insurance coverage within minutes of getting your quotes and applying.
Taking Action
Nearly 37% of Americans rented their homes as of 2016, which is the highest proportion since 1965.
Although the rental rate seems to be on the decline, renters are still changing the fabric of the U.S.
If you need renters insurance, we’ve done the hard work for you—check out the top three companies or get your free renters insurance quote today.